Investor Relations

Market conditions 2009

2009 was a transitional year. Strong economic growth boosted demand for food, feed and energy until third quarter 2008. The escalation of financial turmoil during third quarter 2008 brought the positive market development to a halt, and the decline in deliveries and fertilizer prices during second half 2008 was unprecedented.

Deliveries picked up somewhat during 2009, but remained subdued up to the fourth quarter due to pipeline effects and higher customer risk aversion. The declines were greatest for phosphate and potash, where farmers can mine the soil short-term, and particularly for potash where prices only slowly came down to a level reflecting the weaker demand situation.

Nitrogen prices have through most of 2009 reflected a temporarily oversupplied market and have therefore been set by marginal production costs in Eastern Europe and China’s export costs, giving Yara a cost advantage as Western European spot gas prices have developed favorably.

At the end of 2009, the global nitrogen market turned demand-driven as capacity outside China ran at close to full capacity.The long-term fundamentals for fertilizer demand are strong, as global grain consumption has proven robust during last year’s macro-economic slow-down. This highlights the need for continued improvements in agricultural productivity going forward.

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